Hong Kong: Asian investors continued their efforts to expand the gains in the global market on Wednesday because they are concerned about the prospect of rising inflation and interest rates as global inflation erupted from the coronavirus crisis.
With Joe Biden’s $1.9 trillion handout-rich stimulus on the cusp of being passed, focus on trading floors for weeks has been on the impact of an expected spending splurge by the government and pent-up Americans as they emerge from lockdowns with plenty of spare cash.
In reaction to that, benchmark 10-year Treasury yields have climbed in recent months to one-year highs as dealers sell up in expectation that higher inflation will eat into their returns.
This has fanned fears the Federal Reserve will have to begin winding back the ultra-loose monetary policies — including record low interest rates — that have been a key driver of the year-long equities rally.
On Tuesday, when the high-profile sale of the new three-year US Treasury went smoothly, these concerns were alleviated, which helped lower yields, although the focus is now on Wednesday and Thursday’s 10-year and 30-year bonds. Treasury auction. Weak demand for seven-year Treasury bonds last week triggered a sharp sell-off in global markets.
The news provided a much-needed boost to Wall Street, where the tech-rich Nasdaq soared 3.7 percent, while the Dow and S&P 500 were also well in positive territory.
European markets also rose, with Frankfurt tapping a new record high.
But Asia fluctuated in early trade. Hong Kong, Shanghai and Seoul were slightly higher while Tokyo was barely moved. There were gains in Wellington, Taipei and Jakarta. But Sydney and Singapore fell into the red.